Input tax reclaimed, amounts unpaid, deregistered

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Can someone point me in the right direction? I can find the usual references for bad debt relief but nothing that covers non payment after deregistration from the point of view of the creditor.

We have two companies A and B, different ownership and directors, same admin team. A makes Sales to B with VAT.

B ceases trading and deregisters for VAT having claimed back input Tax.

B fails to pay the invoices, if B was still registered A would claim bad debt relief and B would add back the input tax.

Questions:

1) Is there a procedure for B to repay input tax claimed to HMRC?

2) Given the connection between A and B should A claim bad debt relief? would we be looking as unjust enrichment?

 

 

Replies (2)

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chips_at_mattersey
By Les Howard
13th Mar 2018 17:44

Is A eligible for bad debt relief? Yes. Unjust enrichment does not apply.
Should B adjust for its input tax? Yes. Use form VAT 652 to adjust.

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Replying to leshoward:
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By GW
13th Mar 2018 21:08

Thanks,
So VAT 652 should be used even though B has already deregistered, that was the bit I missed.

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